Q1 2019 animal nutrition earnings down for Cargill

By Jane Byrne contact

- Last updated on GMT

© GettyImages
© GettyImages
Cargill published its first quarter FY 2019 results yesterday. The US agribusiness giant said adjusted operating earnings for the period, ending 31 August, totaled $883m, nearly matching the $888m of last year’s comparative period.

Net earnings on a US GAAP basis were $1.02bn, up 5% from $973m in the prior-year period. Revenues rose 5 percent to $28.7bn, it said.

Adjusted operating earnings in its animal nutrition and protein were just below last year’s strong opening quarter, it reported.

Its animal nutrition earnings lagged the prior year with the company citing a combination of higher input costs, lower sales volumes and pricing pressures in different countries as the reason for the dip. Yet it noted gains in Latin America for micronutrients, premixes and feed additives.

Domestic and international demand for beef remained strong in North America, as did foodservice demand for value-added egg products, said Cargill. However, the US turkey meat market continued to be undermined by excess supply relative to demand, it added.

Despite improved performance in China and Europe, a range of challenges in Central America and Southeast Asia reduced results in the segment’s global poultry business.

The earnings for its origination and processing division were higher, against a weak comparative period, said the group.

“Global demand was strong and markets volatile, as weather events in key crop-growing regions and rising economic uncertainty brought the segment’s sourcing, trading, analytical and logistical skills to the fore.

“Regionally, Asia Pacific improved performance with good trading and oilseed processing results, while North America and Europe realized solid oilseed processing results in canola, soybeans and biodiesel.”

Trade war

Cargill CEO, David MacLennan, told Bloomberg Television this week he was concerned that the tariff war with China could see US soy growers squeezed out of the industry.

“Maybe if it were fixed quickly, we might go back to the way it was, but long term I’m concerned it has a detrimental effect on the US agricultural economy,”​ he said.

The trade dispute has already had an impact on the price of soybeans from Brazil and Argentina.

Cargill, he said, is spending more time talking to US policymakers.

“We recognize what they are pursing is a tactic to make trade more fair and balanced and ultimately we are an American company, we understand the reasons behind some of the moves,"​ MacLennan said. "But we just think there are other tactics that can be pursued to improve trade relations."

 

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